Sunday, June 12, 2016

Nepse scales new high, transaction also nears Rs 2 billion

Liquidity surplus in the banking system, attraction of rights and bonus shares of bank and financial institutions and insurance companies to raise their paid-up capital, and bullish sentiment of investors pushed the share market today to a new record high with the benchmark index approaching near 1,600 points. Along with continuing its bullish run, the market also posted record intra-day transaction of Rs 1.96 billion.
The Nepal Stock Exchange (Nepse) index jumped by 31.26 points to close at the market at 1,597.96 points due to commercial banks that gained 47.47 points.
All trading groups, except Hydropower, ended on the green zone today.
However, today's growth was led by commercial banks. A surge in the transaction of Nepal Bangladesh Bank shares pushed the commercial bank sub-index 47.47 points higher.
Nepal Bangladesh Bank has proposed issuing 80 per cent rights shares, which boosted the demand for its shares, resulting in the transaction of Rs 355.86 million today.
The share market has been in bullish trend for the past few months also due to the full-fledged implementation of dematerialised form of share trading from January 15.
Last Thursday too, the daily transaction at the stock market had set the record of high single day transaction of Rs 1.89 billion.
The excess liquidity in banking system and less investment opportunity has made the stock market lucrative investment opportunity, according ot the stock market analysts.
They also say that investors are finding it beneficial to invest in the stock market rather than park their hard-earned money in banks and financial institutions that offer average interest rates of around 5.8 percent on fixed deposits, let alone savings accounts that attract the minimum interest rates.
According to former president of Stock Brokers Association of Nepal (SBAN) Anjan Raj Poudyal the banks are offering margin lending at 8 to 9 percent interest rate as the banking system is flush with excess liquidity.
According to central bank, banks and financial institutions have extended a total of Rs 35 billion against share pledges in the first nine months of the current fiscal year, a jump by nearly Rs 11 billion compared to the corresponding period of the last fiscal year 2014-15. They had floated Rs 24 billion in margin lending in first nine months of the last fiscal year.
Till last year, average daily turnover of the stock market used to be around Rs 350 million only. However, the increase in turnover today is also due to bulk trading of promoter shares of some listed companies.